Student’s Spending Habits

By Joe Messinger, CFP®

December 9, 2022

3 min READ

The holiday break is a great time to talk with your student about their budget, what they’re doing well, what they need to work on, and confirming who is paying for what. It isn’t just freshman who can get off track during the first term of the school year.

If you’ve spent time talking with your college student and have heard, ”Mom, I have run out of money. I need more money.” Whether your student has spent too much at Starbucks, or ran into unexpected costs they didn’t anticipate, making a plan and deciding who pays for what before students go off to college is important; but a review as the first term comes to a close is a good idea as well.

These conversations are a great way to teach budgeting and give them a great foundation for their spending habits and future financial lives.

A parent’s prerogative

All parents approach their student’s financial responsibilities differently. Some parents expect their students to pay all of their costs outside of tuition, room, and board including gas money, trips to the grocery store, clothing purchases, etc. Other parents say they will pay for anything the parent would have paid for at home including things like toiletries, groceries, and gas, and only expect their students to pay for the extras like football tickets, pizza, streaming services, or trips out with their friends.

Wherever a parent lands on that spectrum, the key is to talk about their expectations with their student. Get everyone on the same page early on. This conversation should be a part of the college money talk between parents and students. You can read our suggestions for the college money talk by clicking here.

I spent HOW MUCH at Starbucks this month?!

The typical 18 year-old is not a “budgeter.” They typically don’t realize what they are spending money on. An important part of being successful with their money is being able to track it. Students can take advantage of whatever tool (an app, a spreadsheet, whatever works) that makes it easiest for them.

Make a list of the categories they will need to pay for on their own and simply set a weekly budget amount to spend. If the weekly $50 budget is blown through in one week, the student knows they have less to spend the following week. Keep it simple, and students will learn some great financial habits.

Where will the spending money come from?

Again, parents vary from one of end of the spectrum (we’ll pay for everything) to the other (you’ll pay for everything). Students want to be involved in the discussion about paying for college. They can see the big picture and understand the extra costs they are responsible for.

The best way for students to be responsible for their spending money is through employment. Students can work over summer and holiday breaks. A typical college semester is 15 weeks long. A student planning on spending $50 per week will need to save $750 to cover those weeks.

Grandparents and other extended family or friends may gift money to the child for birthdays and holidays. What are the parent’s expectations regarding that money? Save some? Spend some? Let the student decide? Include gifts in the conversation.

Parents can decide whether or not to provide an allowance to their child. The child is not free while they live at home. Does the parent want to continue financial support to a certain extent once college begins? Does the parent want to monitor the purchases of their student?

In case of emergency

Parents and their students need to have a plan in case of an emergency. What happens when the student needs to go to urgent care? Do parents want their students to have a credit card for emergencies? (Click here for our blog weighing the pros and cons of credit cards for students.)

If the emergency is more extreme (utilities shut off, no food) and parents are unable to help, this article from NerdWallet can provide some direction. In this day and age, you can easily have a joint credit card and set a limit for your son or daughter’s spending. You can also set alerts for anything spent over a certain amount and track the spending online and with an app from the bank.  

Lots of things to consider!

The answers about spending money–How much? Where does it come from? What is the student responsible for?–are varied depending on the family. The key is to have spending money be part of the conversation. Don’t leave it unaddressed. Get everyone (parents and students) on the same page. Emergencies may happen. Do what you can to be prepared.

Updated December 2022.